How to pay off student loans fast

See how you can get out of student loan debt as quickly as possible—or better yet, how to make a college education more affordable in the first place. 

Student loan debt is skyrocketing

Over the last 30 years, tuition and fees for colleges and universities have soared for a variety of reasons. As a result of these increases, many students have had to take out student loans to pay for their education. 2025 student loan debt statistics show that approximately 42 million Americans have outstanding student loan debt, a total amount that now stands at an estimated $1.7-1.8 trillion. Student loan debt makes up the second largest amount of debt in the nation behind mortgages¹. 

10 tips to pay off student loans

Whether you’re paying off student loans, thinking about taking out a loan, or looking for ways to reduce college costs, here are several strategies that can help mitigate the impact college debt could have on your long-term financial goals.

1. Keep your student loans organized

Keeping your student loans organized is key to paying them off successfully, because it helps you clearly see what you owe, including balances, interest rates, due dates, and loan servicers. When all your loans are tracked in one place—such as a spreadsheet or budgeting app—you can avoid missed payments and make smarter decisions about which loans to prioritize. Regularly reviewing your loans also helps you avoid costly mistakes and capitalize on refinancing opportunities.

2. Enroll in the extended student loan repayment plan

If you have federal student loans, you can enroll in the Extended Student Loan Repayment Plan. Under this plan, you could extend your student loan repayment period from the standard 10 years to 25 years. This would lower your monthly student loan payments, but it would also result in higher total interest payments over the life of your student loan. You’ll need to have at least $30,000 of Direct or Federal Family Education Loan Program (FFELP) loans to qualify. 

3. Make additional student loan payments

If you can afford to, try to make larger payments than are required. That way, you can reduce the principal more quickly and shorten your payoff time. Cutting the principal balance can help you minimize the duration of the loan and reduce the interest you’ll have to pay. 

4. Reduce your student loan interest rates through discounts

Most student loan lenders offer an interest rate discount if you set up automatic payments on your loan. The discount is usually around 0.25 percent, and some lenders go as high as 0.50 percent. While this may seem insignificant, it could knock off a significant chunk of interest over your loan’s life. 

Private student loan lenders may also offer interest rate discounts if you meet certain criteria. Check with your lender and ask if any other interest rate discounts or reductions are available. Some lenders are even willing to reduce your interest rate if you have a high credit score or make a certain amount of payments on time.

5. Consider refinancing your student loans

If you can obtain a lower interest rate, that would help you pay off your student loans faster. Bear in mind, though, that if you refinance you may lose access to certain benefits, like student loan forgiveness programs and income-drive repayment plans. 

6. Consolidate your student loans

The advantage of direct loan consolidation is that your federal student loans are combined into one single federal student loan, so you will have one monthly payment and one interest rate. You’ll also be able to extend the repayment period. Extending your repayment period can reduce your payments each month, but you will pay more interest over time. 

7. Take advantage of student loan tax deductions

You can take the student loan interest deduction on your taxes for the interest you paid during the year on qualified loans. You’re allowed to deduct up to $2,500, depending on your adjusted gross income. The deduction is available for both federal and private loans. 

Do you have to claim student loans on taxes?

No, student loans are generally exempt from federal income taxes—but you may be able to deduct the interest (see below).

What is the income limit for the student loan interest deduction?

For the 2025 tax year (returns filed in 2026), the student loan interest deduction lets eligible borrowers deduct up to $2,500 of interest paid on qualified student loans from their taxable income, even if they don’t itemize. The amount you can deduct begins to phase out based on your modified adjusted gross income (MAGI): for single filers, the deduction starts to phase out once MAGI exceeds about $85,000 and is completely eliminated at around $100,000; for married couples filing jointly, the phase-out generally runs from about $170,000 to $200,000 of MAGI, with no deduction available above the upper limit. Taxpayers with MAGI below the lower threshold can claim the full deduction (up to the amount of interest paid, capped at $2,500).

8. See if you qualify for student loan forgiveness

There are several student loan forgiveness programs that can eliminate all or part of your debt. These programs include President Biden’s Student Loan Forgiveness Plan, as well as Public Service Loan Forgiveness, Teacher Loan Forgiveness, and Income-driven Repayment Forgiveness. Each plan has specific requirements and strict approval policies. Thoroughly research each plan to see if you qualify. 

9. Employer repayment assistance programs

Many employers offer student loan repayment assistance or tuition reimbursement programs, which allow them to contribute up to $5,250 annually toward an employee’s college tuition or student loan repayment assistance through 2026. The added benefit to the employee is that it’s considered nontaxable income. These employer repayment assistance programs implement 5 U.S. Code 5379, which authorizes companies to set up their own student loan repayment programs to help borrowers repay federally insured student loans as a recruitment or retention incentive to attract or retain highly qualified employees.² There are also loan repayment support programs available for nurses, teachers, and members of the military. Speak with your HR department to find out what programs are available at your company. 

10. Borrow from life insurance to pay off debt

If you pass away and you still have a student loan balance, federal student loans will be forgiven. But your family will be responsible for paying back any nonfederal student loans. To avoid passing on this financial burden to your family, you may want to consider a life insurance policy. If you’re single, it could cover any debts you leave behind, and if you have a family, it will also protect your family’s lifestyle. Additionally, a whole life insurance policy can offer some ways to supplement what parents save for college. It’s important to keep in mind that taking out a policy loan to help pay off student debt would reduce the available cash surrender value and death benefit of the policy. Policy loans will also involve interest payments. 

Working with a New York Life financial professional is a good way to start exploring different strategies for achieving your future goals while protecting those you love.

Related:  Debt management—Keep debt from limiting your future

When does interest start on student loans?

Student loan interest generally begins accruing as soon as the loan is disbursed, but the timing depends on the loan type. For federal Direct Subsidized Loans, the U.S. Department of Education pays the interest while the student is enrolled at least half-time, during the six-month grace period after leaving school, and during certain deferment periods. In contrast, Direct Unsubsidized Loans, PLUS Loans, and most private student loans accrue interest immediately, including while the borrower is in school and during grace or deferment periods.

How is the interest on student loans calculated?

Student loan interest is calculated on a daily simple interest formula, meaning interest accrues each day based on the loan’s outstanding principal balance and its interest rate. The daily interest amount is determined by multiplying the principal by the interest rate and dividing by 365, then multiplying that figure by the number of days since the last payment. Payments are generally applied to accrued interest first, with any remaining amount reducing the principal.

Is student loan interest calculated monthly or yearly?

In most cases it is calculated daily using simple (not compounded) interest.

How long does it take to pay off student loans

While the standard federal repayment plan is designed to be completed in 10 years, many people take much longer depending on their loan balance, repayment plan, and income. On average, data show that borrowers in the U.S. often take about 20 years or more to fully repay their student loans, with some income-driven plans stretching repayment out to 20–25 years and extended or consolidated plans reaching up to 30 years or longer.³

Can you pay off your student loans early?

In most cases, yes. There is generally no penalty for paying off a student loan early.

Should you pay off your student loans early?

If you have the mean, you should pay them off a rapidly as you can. That being said, you may want to examine the terms of your loan and see if it might make more sense to pay off other types of debt first—especially if they have a higher interest rate.

Related Content

This article is for informational purposes only. Neither New York Life Insurance Company nor its agents provide tax, legal, or accounting advice. Please consult your own tax, legal, or accounting professional before making any decisions. 

¹“Student Loan Debt Statistics,” The College Investor, September 2025
https://thecollegeinvestor.com/student-loan-debt-statistics/

²“Student Loan Repayment,” U.S. Office of Personnel Management. OPM.Gov

³“Average time to replay student loans: 2026 statistics and data,” Research.com, January 15, 
https://research.com/education/average-time-to-repay-student-loans?